How to get money back for car insurance when selling a car

In what cases can you get a refund for a previously purchased MTPL?

It is possible to legally return your own funds for a previously issued official MTPL policy. But this is only possible in certain cases:

Theft of a car or its total destruction. In case of complete disposal of the car, representatives of the insurance company return the money to the motorist.
Change of ownership of a specific vehicle. It is possible to return money for compulsory motor liability insurance when selling a car if there is an official agreement on the sale of a specific vehicle. If the owner changes under an official power of attorney, you will have to forget about returning the money.
Death of the policyholder or vehicle owner. In such situations, the owner changes, so the agreement loses its legal force.
Complete liquidation of the legal entity. If the car was owned by a company that has ceased to exist, one of the parties to the transaction formally ceases to exist. The agreement becomes invalid.
Liquidation of the insurer due to bankruptcy. In this situation, you need to have time to terminate the agreement before the bankruptcy procedure begins. If you delay with this issue, the company simply will not have enough funds later.

Required documents

To receive money under unused compulsory motor liability insurance when selling a car, you need to terminate the contract early. This basis is legal, however, in order to carry out the procedure, you will be required to write an application for termination of the contract and a refund. The following documents must be attached to the application:

the applicant’s passport (for whom the policy was issued);
valid policy;
documentary evidence of the grounds for termination of the insurance contract;
details where the refund will be made;
receipt for payment of the policy (if available);
notarized power of attorney, if a representative applies.

The list of documents is standard, but it is better to check it in advance with the insurance company where you took out the policy. You can do this by calling the hotline or contacting the nearest branch.

All submitted documents are usually in the hands of the car seller. Documentary evidence of the grounds for termination of the insurance contract will be a vehicle purchase and sale agreement or a certificate of registration of the vehicle under the details of the new owner. Documents must be provided not only in copies, but also in originals.

How to terminate compulsory motor liability insurance early and return money for the unused insurance period?

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Often, citizens who want to receive a refund of the amount due to them notice the expressed reluctance of insurance companies to lose their funds. But, if the rules set out below are followed, you will achieve what you want. A citizen must act in the following natural sequence:

The applicant's appeal to the company where the formal agreement was concluded.

Collection of the required package of papers. Typically, all insurers require approximately the same set of documentation. The differences will lie in the specifics of the situation that allowed you to demand a refund. For example, the return procedure when selling a car will be slightly different from the situation when you need to terminate the contract and return the money invested in the policy due to the disposal of the vehicle. The list of required papers will be presented below.
When the documentation package is collected, it is handed over along with a completed statement, which should include a request for premature cancellation of the agreement. It is worth doing this at your branch of the insurance company. Its representative must provide a special application form, clearly describing the nuances and key points that should appear in the document. The applicant must fill out a couple of forms with his own hand. One will be with him, the second will be transferred to the insurer. The insurance company agent must certify the completed official form with a signature and seal. This will record the exact date of transmission of the official statement.
After the corresponding application is received, the company will carefully study the submitted papers and carry out a recalculation in order to return the funds to the policyholder. It is important to remember that the sooner you submit documents for the return of the required funds, the more significant the amount will be allocated.

Payments can be provided both in cash and non-cash (using the official bank details provided by the citizen).
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What documents will be required?

The list of required papers will differ depending on the case when it became possible to return the money paid when purchasing the policy. Official insurance companies can also make adjustments to the list of documents.

The package of official documents will look like this:

a copy of the policyholder's passport;
photocopy of OSAGO;
a photocopy of the official agreement on the disposal of the car or on its sale;
a receipt that will serve as proof of the fact of payment of the policy;
photocopies of the death certificate of the owner of the vehicle and the right of inheritance;
a photocopy of the title with exact information about the new official owner of the car;
a certificate from the traffic police proving that the car has been deregistered;
official bank details of the existing account;
if this issue is handled by a trusted person, an official power of attorney will be required to represent the interests of a particular citizen.

How to make an application correctly?

In order for the application to be drawn up correctly and for monetary compensation to be received, it is important to study the sample application. It is necessary not only to submit correctly completed documents, but also to comply with deadlines.

For your information! Each day of delay reduces the amount of compensation due.

The application should be written in free form. It needs to reflect information such as:

personal data of the official representative of the insurance company, information about the policyholder and the insurance company;
official policy number;
a request for premature termination of the agreement and the return of the due amount of money (when making a decision, the factor that forced you to apply for funds will also be taken into account);
official details of the still existing special insurance agreement and a special bank account where funds should be received for the previously issued official MTPL policy.

It is important to sign the application and indicate the date the paper was drawn up.

Application form:

Sample statements in .doc and .pdf formats can be downloaded at the bottom of the page.

How to calculate the exact refund amount for a previously issued compulsory motor liability insurance?

Experts recommend requesting a refund under compulsory motor liability insurance when selling a car right on the day the specific car is sold.

After this, they calculate how many days are left until the expiration date of the previously issued compulsory motor liability insurance. If 100 days are not used, 100/365 = 27.3% of the invested money is due for payment. But for the reason that another 23% needs to be subtracted, when calculating we get 0.273*0.77=0.21. This means that we will be talking about a return of 21% of the total policy price.

If the official agreement was signed not for a 12-month period, but for a shorter period of time, this point must be taken into account when calculating. If the policy was purchased for a 4-month period and the same 100 days were not used, the refund amount will be calculated as follows: 100/(31+31+30+31)=81.3%. But when 23% is deducted from this amount, the balance will be equal to 62.6% of the total cost of the agreement. The amount due to the policyholder can be found out using a special formula: B = (PS - 23%) * (n/12), where B is the return amount, PS is the cost of a specific insurance, n is the number of calendar months remaining until the complete termination of the policy.

Early termination of the MTPL agreement

In order to terminate the MTPL agreement ahead of schedule unilaterally, it is necessary to comply with the legal grounds that are set out in the Regulations of the Central Bank.

Conditions

So, what legal grounds can be a valid reason for early termination of a car insurance policy with a partial refund of the money due?

Selling a car. This condition is met most often in practice. Since auto liability insurance is issued for a year, as a result of selling a car, it may not be completely used, and it may not be possible to transfer it to the new owner. This is due to the fact that compulsory motor liability insurance is issued not for the car, but for the person who will drive it; therefore, the policy will not apply to the new owner. There is only one way out - either you lose part of the paid amount, or try to return it through an application for early termination of the contract.
Death of the auto insurer. Heirs can count on a refund of unused insurance in the event of the death of the owner of the vehicle for which the MTPL policy was issued. To do this, they will need to confirm this fact, not only by providing a death certificate, but also to prove entry into inheritance rights.
Causing damage to the vehicle that cannot be repaired. This condition also has a legal basis. If your car cannot be repaired, due to a serious accident or other reason, then you no longer need an insurance policy and you can claim back part of its original cost. A similar thing happens as a result of car recycling according to the state program.
The insurance company lost its license. Today, insolvency of insurance companies is becoming more common, and you may become a victim of such a situation. The legislation protects policyholders in the event of deprivation of an insurer's license and reimburses money for the period that was not used under compulsory motor liability insurance. However, this issue will have to be resolved through the courts, which creates additional difficulties. If you refuse to terminate the contract, then you can continue to use the insurance, but payments will be made by RSA.

I would like to immediately note that one should not confuse the deprivation of an insurance company’s license with its temporary suspension. In the second case, the company is limited to only carrying out actions in the direction of new contracts, but must fulfill obligations under the old ones.

When is a refund issued?

The money can be returned only if the above grounds are met and there is evidence of them. Moreover, the evidence must be documented. You can simply terminate the contract unilaterally without explanation, but you will not receive any compensation. If all requirements are met, then the money must be returned no later than 14 days from the date of application, if it is transferred to a bank account or card, and if in cash, then on the same day. Remember, if the application is written correctly, you have all the necessary documents in your hands and the legal conditions for terminating the contract are met, then you cannot be refused a refund of part of the insurance amount.

Return deadlines

According to the rules of OSAGO, there must be a legal return of the money that was invested in purchasing the policy:

on the day of termination of the official policy (if payment is made in cash);
before the expiration of a 2-week period from the date of submission of the official application, if the payment will be made in cashless form.

Insurance companies independently choose how it would be more convenient for them to issue a certain balance of money to the client.

If there is a delay in the return, the motorist must send a prepared claim letter to the insurance office. If there is no response to the letter of claim, you should seek protection of your rights in an official court.

Citizens who sell their cars should remember that the amount of money back under the policy should be calculated from the day the official application is written, and not from the day when the official purchase and sale agreement is concluded. Therefore, experts do not recommend that all policyholders postpone the issue of contacting an official insurer. Otherwise, there will be a risk of losing part of the invested funds.

Official representatives of an insurance organization often encounter difficulties when terminating a contract. Problems often arise when transferring money. Insurers are not always the culprits. Often the culprits of the problem are policyholders who make mistakes when indicating their current account number. In such situations, the money is sent to a completely different person.

It is also not advisable to delay the collection of documents. You should also be careful when filling out the application. When giving it to the insurance company, it makes sense to make a copy of the official document. Such actions will protect you from unforeseen situations.

If the official insurer proves that the required amount of funds has been transferred, but you have not received it, you should find out the payment order number and rush to the bank office. There you can easily check whether funds have been transferred to the special account. In very rare cases, money gets stuck in a banking institution, so if this turns out to be the case, it would be inappropriate to blame the insurance company for late accrual of funds.

Nuances of processing a return

Receiving money for compulsory motor liability insurance when selling a car contains its own subtleties that not everyone knows about. Firstly, a large number of disputes are being waged around the 23% that the insurance company takes for itself, and secondly, this provision is not reflected in the law. Many policyholders do not agree with this situation and sue the insurer in order to obtain full compensation. And why all? Because the law does not have a clear statement that would talk about the mandatory withdrawal of 23% from the policyholder, it only says that the insurance company takes for itself that part of the cost that is proportional to the used period of validity of the policy (Civil Code of the Russian Federation No. 958).

Thus, if you have a sufficient legal basis or use the help of a lawyer, you can turn this situation to your side. Referring to the inaccuracy of the law, where there is not a word about 23%, you can offer to count the recalculated amount under the policy towards the execution of a new contract, no matter whether it is compulsory motor liability insurance, CASCO insurance or another insurance product. In most cases, the company's management agrees not to participate in lengthy litigation.

Well, one more nuance, which also requires your attention in the event of termination of the MTPL policy early when selling a car, is that not only the policyholder (for whom the current policy is issued), but also the new owner of the car has the right to apply for compensation. Of course, not everyone knows about this, but you must understand that the situation may not turn out in your favor. For the rest, don’t waste time, collect the necessary documents and in the near future, you will receive the difference in the cost of compulsory motor liability insurance due to you: usually payments are made from 3 to 5 days.

When should you not terminate an official contract under compulsory motor liability insurance?

There are a number of situations when it is not worth terminating the MTPL agreement. We are talking about cases when:

There is little time left before the end of the contract period.
the sale of the vehicle is planned (under such circumstances, it would be more reasonable, instead of terminating the MTPL agreement, to simply add a new citizen-owner of the vehicle to the existing policy).

Before contacting an insurance organization with a request to allocate money, it makes sense to make your own calculations and understand whether it would be advisable to submit an official application for the return of a certain amount.

When the agreement is terminated

Selling a car is a difficult and responsible business. Along with the transport comes a car permit. You can give it to the buyer, or receive compensation for it.

The first option is simple, since the deed is an official document and the interest rate is simplified. But the client will not be able to refuse the service on his own. There must be a valid and valid reason for terminating a contract.

The main reasons for insurance termination:

change of vehicle owner;
complete destruction of the car;
death of the policyholder;
liquidation of a legal entity;
car recycling;
revocation of the insurer's license.

Refunds for car insurance are simplified by law. After fulfilling one of the conditions, the owner of the car needs to come to the office of any branch of the insurance company within 14 days and fill out documents. Large organizations are debugging the system, and problems with registration should not arise. The amount is calculated for the unused period of the policy.

Features when terminating compulsory motor liability insurance:

During the sale of the vehicle, the vehicle license is considered invalid.
The contract must be terminated quickly so that the buyer can use the new vehicle.
The buyer can either extend the agreement with the insurers or choose another organization.
A general power of attorney cannot terminate a contract. You can add a new user, and after the auto insurance expires, reissue it to a different name.

There are more problems with CASCO, since this is a voluntary decision of the driver. Before going to the insurance company, you need to carefully study the act. The percentage of voluntary car insurance is higher than that of a standard arrangement. The policyholder needs to study all the intricacies of the contract.

Some valuable tips

Misunderstandings often arise regarding the refund amount. It is important to understand that, according to the Federal Law “On Compulsory Motor Liability Insurance”:

a partial refund is provided (the amount needed for special insurance compensation will be returned);
An amount proportional to the unused period of MTPL coverage will be refunded.

Typically no more than 77% of the total policy price is returned. The remainder, equal to 23%, always goes to other purposes. He won't be coming back.

When applying for a refund of money previously spent on an insurance policy, it is important to take into account a number of points. For example, the KBM coefficient, known to many, for the absence of emergency situations while driving. It increases the policyholder's eligible discount when purchasing a future policy. If the validity period of a previously issued compulsory motor liability insurance expires completely after a few calendar months, there is no need to interrupt the insurance. In this case, you can wait for the KBM jump. After this, the next policy can be purchased at the most favorable price. If the agreement is terminated early and the funds are returned, the coefficient will not increase.

Before sending the application, you need to take into account the period until the full expiration of the agreement. It is worth independently calculating the amount of the refund and the amount of upcoming costs. It makes sense to weigh all the advantages and disadvantages and only after that take on the solution to the issue. Another interesting option that provides the opportunity to receive money directly in the office is the case when the current policy is reissued to the new owner. The applicant will receive the required amount from it (of course, minus the standard 23%).

There is also a rule that few people know. If the owner has successfully sold the car and has a strong desire to finally terminate the MTPL agreement and return the money, an official application must be submitted no later than 60 days after the sale of the vehicle. Otherwise, funds under the official insurance special policy will not be allocated.

The legislative framework for compulsory motor liability insurance changes frequently. It is important to keep track of innovations and changes.

Now you know how to return money for an unused MTPL policy in the event of the death of the car owner, sale of the car, liquidation of the company, or theft of the vehicle. Use the example calculations and seek the return of the unspent amount of funds under the MTPL policy, if you have grounds for this.

Main fields for calculation

The following data is required for calculation

Insurance premium amount. When you receive a loan, the bank connects you to the group insurance program. At the same time, when a loan is issued, the loan amount increases. You also borrow the amount of the insurance premium. In some cases, it can be returned if it is delayed.
Insurance start date. Usually coincides with the date the loan was issued. From this moment the contract comes into force
Loan term = insurance period. Usually goes in months
Date of full early repayment. This is the date when the money was written off for full early repayment and the amount of debt to the bank became zero. If early repayment always occurs on the next payment date, this will be the nearest next payment date